Axis Bank Q3 Results: Profit Beats Estimates at ₹6,490 Crore

Introduction

Axis Bank announced a steady performance for the third quarter of fiscal year 2026, reporting a net profit that surpassed market expectations. The private sector lender's results for the October-December period were supported by healthy growth in its loan book and resilient net interest income. Furthermore, the bank demonstrated an improvement in its asset quality on a sequential basis, signaling stability in its lending operations. The announcement, made on January 26, provided a comprehensive look at the bank's financial health amid a competitive banking landscape.

Quarterly Financial Performance

For the quarter ended December 31, 2025, Axis Bank posted a standalone net profit of ₹6,489.6 crore, marking a 3% increase from the ₹6,304 crore reported in the corresponding quarter of the previous year. This figure comfortably exceeded the consensus analyst estimate, which was pegged around ₹6,046 crore. The profit growth reflects the bank's ability to manage its operations effectively despite prevailing economic conditions.

Core earnings also showed strength. Net interest income (NII), the difference between interest earned and interest expended, grew by 5% year-on-year to ₹14,286.4 crore. This was up from ₹13,606 crore in the same period last year and also beat Street expectations of ₹14,089 crore. The growth in NII indicates a stable performance in the bank's primary lending activities.

Asset Quality Shows Improvement

A key positive from the quarterly results was the sequential improvement in asset quality. The bank's Gross Non-Performing Assets (GNPA) ratio declined to 1.40% of total advances, compared to 1.46% in the September 2025 quarter. Similarly, the Net Non-Performing Assets (NNPA) ratio eased to 0.42% from 0.44% in the previous quarter. This reduction in bad loan ratios points to better risk management and recovery processes.

In absolute terms, gross NPAs stood at ₹17,166.8 crore, a decline from ₹17,307.7 crore in the prior quarter. However, net NPAs saw a marginal increase to ₹5,154.3 crore from ₹5,113.9 crore quarter-on-quarter, a detail that investors will continue to monitor.

Balance Sheet Expansion

Axis Bank continued to expand its balance sheet with robust growth in both loans and deposits. Total advances grew by 14% year-on-year, reaching ₹11.59 lakh crore. This growth was broad-based, with retail loans increasing by 6%, SME advances rising by 22%, and corporate loans growing by 27%.

On the liability side, total deposits increased by 15% year-on-year to ₹12.61 lakh crore. The growth was supported by a 20% rise in current account deposits and a 16% increase in term deposits. The CASA (Current Account Savings Account) deposits constituted 39% of the total deposits, providing a stable source of low-cost funds.

Performance for Nine Months (9MFY26)

Looking at the performance for the first nine months of the fiscal year, Axis Bank's operating profit increased by 5% to ₹32,803 crore. Net interest income for the period rose 3% to ₹41,591 crore, while fee income saw a strong 11% growth to ₹17,883 crore. However, the net profit for the nine-month period declined by 10% year-on-year to ₹17,385 crore. This drop was attributed to higher total provisions, which stood at ₹9,741 crore for the period.

Management Commentary

Reflecting on the results, MD & CEO Amitabh Chaudhry stated, “Our progress this quarter reflects our focus on creating solutions that matter - simplifying access to credit, reimagining digital banking, and investing in talent and ideas that will shape the future.” He emphasized the bank's commitment to strengthening its competitive edge by modernizing platforms and adapting to shifts in customer behavior.

Market Outlook and Analysis

The Q3 results were largely seen as stable and slightly ahead of expectations, particularly on the profit front. The improvement in asset quality was a significant positive, reassuring investors about the health of the loan book. However, analysts noted the pressure on net interest margins (NIM), which stood at 3.64%, and the impact of higher operating expenses on overall profitability. The bank's strategic focus on 'Bharat Banking' to tap into rural and semi-urban markets, along with its leadership in the UPI payments ecosystem, are considered key long-term growth drivers.

Conclusion

Axis Bank delivered a resilient performance in the third quarter, beating profit estimates and improving its asset quality. While healthy loan and deposit growth underscore a solid operational foundation, the decline in nine-month profitability due to higher provisions and ongoing margin pressures remain areas to watch. The management's focus on digital transformation and expanding its reach is expected to guide its growth trajectory in the coming quarters.